European Union: Brussels Court Of Appeal Refers Questions To ECJ On Validity Of Prohibition On Price Reductions For Tobacco Products

In an interim judgment of 5 May 2015, the Brussels Court of Appeal referred three questions for a preliminary ruling to the Court of Justice of the European Union ("ECJ"). At issue is the conformity of the Belgian prohibition imposed on retailers to offer price reductions/discounts for tobacco products. The reference was made in the context of an appeal lodged by Colruyt against a judgment of the criminal section of the Brussels Court of First Instance of 10 May 2013 which had imposed a fine of EUR 270,000 on Colruyt for having offered unlawful price reductions on tobacco products (Brussels Court of Appeal, interim judgment of 5 May 2015, Openbaar Ministerie v. établissements Fr. Colruyt NV).

Article 7 §2bis of the Law of 24 January 1977 on the protection of consumers' health in relation to foodstuffs and other products (Wet van 24 januari 1977 betreffende de bescherming van de gezondheid van de gebruikers op het stuk van de voedingsmiddelen en andere producten/Loi du 24 janvier 1977 relative à la protection de la santé des consommateurs en ce qui concerne les denrées alimentaires et les autres produits – the "Law") provides, subject to very limited exceptions, for a general ban on advertising of and sponsoring by tobacco, products based on tobacco and similar products. The terms "advertising" and "sponsoring" are defined very broadly as "any communication or act which directly or indirectly aims to promote the sale, regardless of the place, means of communication used or techniques used". This broad definition covers a wide array of communications and promotion techniques, including price reductions and discounts.

The Court of Appeal asked the ECJ to clarify whether (i) Article 15(1) of Council Directive 2011/64/EU of 21 June 2011 on the structure and rates of excise duty applied to manufactured tobacco (the "Directive"), possibly read in conjunction with Articles 20 and 21 of the Charter of Fundamental Rights of the European Union of 7 December 2000; (ii) Article 34 of the Treaty on the Functioning of the European Union ("TFEU"); and/or (iii) Article 4(3) TFEU, read in conjunction with Article 101 TFEU, preclude a national measure which requires retailers to respect minimum prices by prohibiting the application of a price for tobacco products which is lower than the price that the manufacturer/importer has affixed to the revenue stamp.

At the first instance level, Colruyt had already invoked various arguments based on European law. However, these arguments were all rejected by the Brussels Court of First Instance.

In particular, the Brussels Court of First Instance ruled that Article 15(1) of the Directive does not require EU Member States to allow retailers to determine freely the price of tobacco products. According to the Court, EU Member States only have to respect the price autonomy of tobacco producers and importers.

As regards Colruyt's free movement of goods argument (Article 34 TFEU), the Brussels Court of First Instance held that the obligation for retailers to respect a minimum price for tobacco products does not amount to a quantitative import restriction. Instead, it ruled that this obligation qualifies as a non-discriminatory selling arrangement given that it (i) applies to all economic operators active on the Belgian market; and (ii) has a similar legal and factual impact on all economic operators active on the Belgian market. Such selling arrangements are thought to be compatible with Article 34 TFEU.

Finally, the Brussels Court of First Instance held that the measure does not restrict competition between producers and importers; and between retailers on the one hand and producers and importers on the other hand. While admitting that the measure restricts competition between retailers, the Court considered that this restriction only affects the Belgian market and does not affect inter-State trade.

Having been asked to overturn the first ruling, the Brussels Court of Appeal decided to stay the proceedings and to seek clarifications from the ECJ. The Court of Appeal will be in a position to decide on the merits of the case once it has received the ECJ's preliminary ruling.

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